Germany Holding Up Bid by Greece for Loan Extension

On Thursday, Germany rejected a proposal by Greece for an extension of six months to its loan agreement with the euro zone. Germany said the proposal was not a significant solution because it lacked committing Athens to the conditions of its original international bailout.

The stance by Berlin set up what will be difficult talks on Friday at an all important meeting of the finance ministers from the region, when the new leftist government of Greece, racing to find a solution to running low on cash, will face pressure to make additional concessions.

As its biggest creditor and paymaster in the EU, Germany holds the power to block any deal and cast adrift Greece without any financial lifeline, which could potentially push the country toward an exit from the euro zone. However, officials in other countries saw the response by Germany as tactical and have forecasted that a deal would be made by the weekend, after additional wrangling.

An official from Greece said that Alexis Tsipras the Prime Minister had a telephone conversation of 50 minutes with Angela Merkel the German Chancellor on Thursday, which was believed to be the first exchange of significance since the radical government of Athens was elected into office on January 25.

The official added that the conversation was positive and geared towards finding a solution that was mutually beneficial for both Greece and the rest of the euro zone.

The request was formally submitted early by Yanis Varoufakis the Finance Minister after a number of days of negotiations with the European Commission.

While the effort was welcomed by officials in Brussels by the government elected on a platform of anti-austerity, Germany officials said the proposal was lined with loopholes that had no commitment to respect the terms of the bailout.

A spokesperson for Wolfgang Schaeuble the Finance Minister of Germany said the proposal by Greece had not met the criteria agreed by the rest of the Eurogroup and is nearer to bridge financing without meeting the demands of the bailout program.